Cost of Living Crisis: the potential legal issues for hospitality and leisure employers

Show me the money

Although employers are not under any general legal obligation to increase wages, other than increases in line with the National Minimum Wage, many employment contracts in the hospitality and leisure sector will include an annual pay review clause. Annual pay reviews must be carried out in good faith, or the employer will be in breach of the implied duty to maintain employees’ trust and confidence.

Failing to consider and respond to requests for pay reviews may also risk resignations and the waste of valuable time and money trying to replace an employee in particularly challenging times for the hospitality and leisure industries.

Any request for a pay rise must be handled in accordance with the terms of an employee’s contract of employment and employers should ensure that they can objectively justify any refusal to award a pay increase – for example, because of increased costs to the business affecting payroll budgets, or financial restraint ahead of the likely forthcoming recession.

If a pay rise isn’t possible, hospitality and leisure employers could consider a one-off cost of living bonus payment instead; or other ways to support employees financially – for example, by offering discounted food at work, season ticket loans, sign-posting to financial advice services or Employee Assistance Programmes.

Additional hours requests

In terms of requests for additional hours or work, most employment contracts will require hospitality and leisure employees to gain their employer’s consent to undertake additional employment or may include a ‘whole time and attention’ clause. Employees may also be restricted from working for competitors during and after their employment.

However, it is illegal to include a contractual term in zero-hours workers’ contracts requiring them to work exclusively for one employer – something to be aware of in the hospitality and leisure sector.

The 48-hour limit on the working week under the Working Time Regulations, will apply across all roles undertaken by an employee – including those undertaken for separate employers - unless employees have specifically opted out.

Employers also have a duty to maintain a safe system of work for their employees. This could include the impact of employees undertaking multiple jobs across the sector as this duty has a wide scope.

If an employee wants to undertake additional employment, it may be possible to accommodate this. However, employers need to consider the impact on the business, the impact on the employee and the terms of the employee’s contract of employment.

TO DO CHECKLIST

If you are presented with requests for pay increases and / or additional employment you should:

• check the employee’s contract of employment for pay review provisions and any restrictions/requirements which would prevent an employee taking on a second job
• consider a one-off bonus or other non-financial options to support employees, if a pay increase is not possible
• ensure that any additional hours worked in a second job do not exceed the maximum 48-hour working week (if the employee has not opted out)
• consider whether there are any health and safety / wellbeing issues if the additional work would place an undue strain on the employee’s ability to undertake their role, particularly if there is a safety critical element to their work - for example, if they are working in a busy kitchen
• consider whether a second job may impact on an employee’s performance in their current role.